The UK Financial Conduct Authority (FCA ) announced on Thursday that between July and September 2022, it intervened 4,151 times to withdraw or amend rogue financial promotions. As highlighted by the FCA, the most common breaches involved contracts for difference (CFD) providers.
According to the market watchdog, it is the highest number since it started publishing the data. During the third quarter, the FCA issued more than 300 warnings regarding authorized individuals and firms seeking to take advantage of rising living costs due to the current economic turmoil. One in five of those companies turned out to be clone scams.
"As consumers feel the financial squeeze, they could be tempted by high risk, unregulated products and services or they could become a target for scammers preying on moments of vulnerability. As a result, we're doing even more to tackle false claims in adverts, issue prompt warnings to consumers, and we continue to engage with the largest tech and social media platforms as they also play an important part in protecting consumers from online harm," Mark Steward, the Executive Director of Enforcement and Market Oversight at the FCA, said.
"This is why changes to the Online Safety Bill to cover paid-for financial services advertising online are very much needed right now."
Retail banking, investments and lending were among the sectors that showed the highest withdraw/amend outcomes and amounted to 95% of FCA's interventions with licensed entities. As reported, most breaches involved contracts for difference providers, credit brokers and e-money providers.
Misleading and Unclear Social Media Promotions by the CFDs Companies
The FCA publishes its "Financial Promotions Quarterly Data" along with an example of the most common breaches and interventions. The newest edition highlights misleading social media promotions conducted by CFDs providers.
"We identified a CFD provider who had failed to meet the requirements in terms of prominence and proportionality regarding the required risk warning in respect of loss percentage on a video shared via their social media promotions which included YouTube and Twitter," the FCA stated.
The British financial market watchdog contacted the trading company and requested a full review of all their financial promotions and a correction of identified issues. As a result, more than 40 promotional campaigns were withdrawn or amended to comply with the FCA's rules.
The British FCA is one of Europe's most active financial market watchdogs, issuing regular warnings, strategy updates and long-term plans to improve investor and consumer safety. This week it charged four individuals for their involvement in a binary options scam that defrauded investors of £1.2 million.
